M/S PYRAMID DEVELOPERS, Nagpur V. Joint CIT Range 1, Nagpur

ITA 343/NAG/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4101 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 11-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U U KASAR
• Keywords: Income from undisclosed sources; Non-deduction of tax; Corroborative evidences
• Section: 40A(3); 133A; 131; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.343/NAG./2015 ( ASSESSMENT YEAR : 201112 ) M/S. PYRAMID DEVELOPERS WARD NO.125, SHREE GANESH SNEHAL APARTMENT, SHRADHANANDPETH S.A. ROAD, NAGPUR 440 010 PAN AAFCP2753D APPELLANT V/S JT. COMMISSIONER OF INCOME TAX RANGE1, NAGPUR .... RESPONDENT ITA NO.291/NAG./2015 ( ASSESSMENT YEAR : 201112 ) M/S. PYRAMID ARCADE PVT. LTD. PLOT NO.78, EACH A CLASSIC OPP. INDIAN OIL PETROL PUMP ABHYANKAR NAGAR, NAGPUR 440 010 PAN AAFCP2753D APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE1, NAGPUR .... RESPONDENT ASSESSEE BY : SHRI AJAY SINGH REVENUE BY : SHRI U.U. KASAR DATE OF HEARING 23.10.2018 DATE OF ORDER 26.10 .2018 2 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. O R D E R PER G. MANJUNATHA, A.M. THESE TWO APPEALS HAVE BEEN FILED BY THE DIFFERENT ASSESSEES CHALLENGING SEPARATE BUT IDENTICAL ORDERS DATED 14 TH JULY 2015 AND 15 TH OCTOBER 2015, PASSED BY THE LEARNED COMMISSIONER (A PPEALS)I, NAGPUR, FOR THE ASSESSMENT YEAR 201112. 2. SINCE THESE APPEALS INVOLVING COMMON ISSUES ARISING OUT OF IDENTICAL SET OF FACTS AND CIRCUMSTANCES, THEREFORE , AS A MATTER OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. ITA NO.291/NAG./2015 ASSESSEES APPEAL A.Y. 201112 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1) THAT, ON FACTS, LAW AND CIRCUMSTANCES OF THE PRE SENT CASE, THE LEARNED CIT (A)-I, NAGPUR ERRED IN CONFIRMING TH E BUSINESS DISALLOWANCE OF ` 43,00,000/- UNDER SECTION 40A(3) OF THE INCOME TAX ACT, 1961, MADE BY THE LEARNED DCIT, CIR CLE-1, NAGPUR, WHEREAS THE IMPUGNED PAYMENT (ADVANCE) AMOUN TING TO ` 43,00,000/- (CASH) HAS NOT BEEN MADE BY THE APPELLANT COMPANY DURING THE YEAR UNDER CONSIDERATION, THE SA ME CORRESPONDS TO F.Y 2009-10 RELEVANT TO A.Y 2010-11, I.E PRECEDING THE YEAR UNDER APPEAL. 2) THE LEARNED CIT (A)-I, NAGPUR HAS ALSO ERRED IN N OT CONSIDERING THE EVIDENCES SUBMITTED BEFORE HIM, THE MERIT AND FACTUAL POSITION OF THE CASE RESULTING IN CONFIRMAT ION OF ARBITRARY DISALLOWANCE OF THE SUM AS MENTIONED IN G ROUND NO.- 1 SUPRA, THE ACTION AND VIEW TAKEN BY THE LEARNED C IT (A)-I, NAGPUR AS WELL AS LEARNED A.O IS PALPABLY BAD AND NO T TENABLE IN LAW HENCE THE ORDER PASSED BY THE LEARNED A.O AN D CONFIRMED BY THE LEARNED CIT(A)-I, NAGPUR, MUST BE QUASHED. 3 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENG AGED IN THE BUSINESS OF LAND DEVELOPMENT & CONSTRUCTION AND SAL E OF FLATS. A SURVEY ACTION UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE O N 19 TH JANUARY 2011. A SURVEY ACTION RESULTED INTO DETECT ION OF INCRIMINATING DOCUMENTS IMPOUNDED AS PER ANNEX. B1 AND B2. SHRI GUNWANT SUDAMRAO DEOPARE, DIRECTOR OF M/S. PYRAMID ARCADES PVT. LTD., IN THE COURSE OF HIS STATEMENT RECORDED ON OA TH UNDER SECTION 131 OF THE ACT ON 19 TH JANUARY 2011, IN RESPONSE TO QUESTIONS NO.12 TO 16, HAD ADMITTED THE ADDITIONAL UNACCOUNTED INCOME OF ` 2,09,37,500. THE ADDITIONAL UNACCOUNTED INCOME WAS DECLARED ON A CCOUNT OF ON MONEY RECEIVED FROM SALE OF FLATS WHICH HAS NOT BEE N ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. THE ASSESSEE HAS FILED ITS RE TURN OF INCOME FOR ASSESSMENT YEAR 201112 ON 29 TH SEPTEMBER 2011, DECLARING TOTAL INCOME AT ` 1,70,13,782, AS AGAINST THE DECLARED INCOME OF ` 2,09,37,500. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTICED THAT ALTHOUGH THE ASSESSEE HAD ADMI TTED ADDITIONAL INCOME OF ` 2,09,37,500, ONLY DECLARED AN INCOME OF ` 1,70,13,782, THEREFORE, ISSUED A SHOW CAUSE NOTICE ASKING THE AS SESSEE AS TO WHY THE SUM OF ` 39,23,718, SHOULD NOT BE ADDED TO HIS TOTAL INCOME . IN 4 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. RESPONSE TO THE SHOW CAUSE NOTICE, THE LEARNED AUTH ORISED REPRESENTATIVE FOR THE ASSESSEE HAS FILED HIS SUBMI SSIONS AND CONTENDED THAT IN SURVEY WHAT HAS BEEN AGREED IS TH E TOTAL RECEIPT DURING THE PREVIOUS YEAR AND WHOLE OF THE RECEIPTS ARE NOT INCOME. THE ASSESSING OFFICER, AFTER CONSIDERING THE RELEVANT S UBMISSIONS OF THE ASSESSEE AND ALSO TAKING INTO ACCOUNT THE DECLARATI ON GIVEN DURING THE COURSE OF SURVEY OBSERVED THAT THE ASSESSEE HAS OFF ERED ADDITIONAL INCOME MADE ON ACCOUNT OF ONMONEY TOWARDS SALE OF FLATS, THEREFORE, THE PLEA OF THE ASSESSEE IS NOT TENABLE. ACCORDINGL Y, HE MADE ADDITION OF ` 39,23,718. 4. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSE SSEE HAS DEBITED AN AMOUNT OF ` 2,58,86,000, TO PURCHASE ACCOUNT. IN ORDER TO ASCERTAIN THE CORRECTNESS OF PURCHASES, THE ASSESSI NG OFFICER CALLED UPON THE ASSESSEE TO FILE NECESSARY EVIDENCES. IN R ESPONSE, THE ASSESSEE HAS FILED COPY OF SALE DEEDS OF LAND. THE ASSESSING OFFICER, ON ANALYSIS OF SALE DEEDS, NOTICED THAT THE ASSESSEE H AS MADE CASH PAYMENT EXCEEDING ` 20,000 ON VARIOUS DATES FOR PURCHASE OF LAND IN CONTRAVENTION OF PROVISIONS OF SECTION 40A(3) OF TH E ACT. THE TOTAL OF SUCH PAYMENTS COMES TO ` 43 LAKH. THEREFORE, THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE AND ASKED THE ASSESSEE AS TO WHY CASH PAYMENT OF ` 43 LAKH SHALL NOT BE DISALLOWED AS PER THE PROVISI ONS OF SECTION 40A(3) OF THE ACT. IN RESPONSE, THE ASSESSE E HAS SUBMITTED 5 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. THAT THERE IS A BUSINESS EXIGENCIES IN MAKING CASH PAYMENT AND ALSO THE IDENTITY AND GENUINENESS OF TRANSPORTATION ARE BEYOND DOUBT. THE ASSESSEE DEALT WITH THE SELLER FOR THE FIRST TIME A ND THE SELLER INSISTED FOR CASH PAYMENT, THEREFORE, ITS CASE FALLS WITHIN THE AMBIT OF RULE 6DD(J) AND COVERED BY CIRCULAR NO.220 OF 1997, ISSU ED BY THE CBDT, WHERE IT WAS EXPLAINED THE BUSINESS EXIGENCIES. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND ALSO ON ANALYSIS OF PROVISIONS OF SECTION 40A(3) OF THE ACT AND RULE 6DD(J), HELD THAT AS PER THE PROVISIONS OF SECTION 40A(3) OF THE ACT, IF ANY PAYMENT IS MADE OTHERWISE BY WAY OF ACCOUNT PAYEE CHEQUE / DEMAND D RAFT IN EXCESS OF ` 20,000, THEN THE WHOLE AMOUNT SHALL BE DISALLOWED UNDER SECTION 40A(3) OF THE ACT. THE ASSESSING OFFICER FURTHER OB SERVED THAT THOUGH THE ASSESSEE CLAIMED TO HAVE COVERED WITHIN THE PRO VISIONS OF RULE 6DD(J) AND CBDT CIRCULAR NO.220 OF 1997, BUT FACT R EMAINS THAT THE PROVISIONS OF RULE6DD(J) HAS BEEN OMITTED FROM STA TUE AND ACCORDINGLY THE CIRCULAR ISSUED BY CBDT EXPLAINING T HE PROVISIONS OF RULE 6DD(J) IS ALSO OMITTED FROM THE STATUTE W.E.F. 25 TH JULY 1995. ACCORDINGLY, HE MADE ADDITION OF ` 43 LAKH UNDER SECTION 40A(3) OF THE ACT. THE ASSESSING OFFICER ALSO MADE ADDITION OF PE NALTY EXPENSES OF ` 1,19,230, RENT OF ` 1,98,450 UNDER SECTION 40(A)(IA) OF THE ACT FOR FAILURE TO DEDUCT TDS UNDER SECTION 194I OF THE ACT , AND ALSO DISALLOWED THE AMOUNT OF ` 2,57,530 TOWARDS ADVERTISEMENT EXPENSES 6 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. FOR FAILURE TO DEDUCT TAX AT SOURCE UNDER SECTION 1 94C OF THE ACT. AGGRIEVED BY THE ASSESSMENT ORDER PASSED BY THE ASS ESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPE LLATE AUTHORITY. 5. BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSIN G OFFICER IN RESPECT OF ALL ADDITIONS. THE LEARNED COMMISSIONER (APPEALS), FOR THE DETAILED REASONS RECORDED IN HIS ORDER, DISMISSED T HE APPEAL FILED BY THE ASSESSEE AND CONFIRMED THE ADDITIONS MADE BY TH E ASSESSING OFFICER TOWARDS DIFFERENCE IN INCOME ADMITTED DURIN G THE COURSE OF SURVEY, DISALLOWANCE OF CASH PAYMENT UNDER SECTION 40A(3) OF THE ACT, DISALLOWANCE OF PENALTY EXPENSES, DISALLOWANCE OF R ENT AND DISALLOWANCE OF ADVERTISEMENT EXPENSES. AGGRIEVED B Y THE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) THE AS SESSEE IS IN FURTHER APPEAL BEFORE US. 6. THE ONLY ISSUE THAT CAME UP FOR OUR CONSIDERATION I S DISALLOWANCE OF CASH PAYMENTS OF ` 43 LAKH UNDER SECTION 40A(3) OF THE ACT. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT THE LEA RNED COMMISSIONER (APPEALS) ERRED IN NOT APPRECIATING THE FACT IN RIG HT PERSPECTIVE EVEN THOUGH THE ASSESSEE HAS FILED NECESSARY EVIDENCES T O PROVE NECESSITY OF MAKING CASH PAYMENT FOR PURCHASE OF LANDS AND AL SO THE BUSINESS EXIGENCIES. THE LEARNED COUNSEL FOR ASSESSEE FURTHE R SUBMITTED THAT 7 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. THE ASSESSEE HAS MADE CASH PAYMENT ON SUNDAY BEING HOLIDAY, THEREFORE, THERE IS NO OPTION FOR THE ASSESSEE TO M AKE PAYMENT BY ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT, AS THE SAID P AYMENT HAS BEEN MADE AT THE INSTANCE OF BUYER WHO INSISTED FOR CASH PAYMENT. THE LEARNED COUNSEL FOR ASSESSEE FURTHER SUBMITTED THAT THERE IS A BUSINESS EXIGENCIES AND THE PROVISO TO SECTION 40A(3) OF THE ACT GIVES EXCEPTION IN THE CASES WHERE THE BUSINESS EXIGENCIES REQUIRED TO MAKE PAYMENT OTHERWISE BY WAY OF ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT AND SUCH PAYMENTS ARE ARE OUTSIDE THE PURVIEW OF SECTION 40A (3) OF THE ACT. THE LEARNED COUNSEL FOR ASSESSEE FURTHER SUBMITTED THAT THE IMPUGNED PAYMENTS ARE MADE IN THE FINANCIAL YEAR DIFFERENT T HAN THE FINANCIAL YEAR UNDER APPEAL FOR WHICH NECESSARY EVIDENCES HAV E BEEN PLACED BEFORE THE LEARNED COMMISSIONER (APPEALS). THE LEAR NED COMMISSIONER (APPEALS) IGNORED ALL THESE EVIDENCES AND CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER MERELY FOR THE REASON THAT NO EVIDENCES HAVE BEEN FILED. THEREFORE, ONE MORE OPPO RTUNITY MAY BE GIVEN TO THE ASSESSEE TO FILE NECESSARY EVIDENCES B EFORE THE ASSESSING OFFICER AND ACCORDINGLY REQUESTED FOR RESTORING THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, STRONGLY SUPPORTED THE ORDER OF THE LEARNED COMMISS IONER (APPEALS). THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUB MITTED THAT THE 8 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. ASSESSEE ALTHOUGH CLAIMED TO HAVE MADE PAYMENT ON S UNDAY FAILED TO FILE ANY EVIDENCE JUSTIFYING ITS CLAIM, THEREFORE, THE LEARNED COMMISSIONER (APPEALS) WAS RIGHT IN REJECTING THE C LAIM. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAS TAKEN DIFFERENT ARGUMENT BEFORE THE LEARNED COMMISS IONER (APPEALS) TO CONTEND THAT THE IMPUGNED PAYMENTS ARE MADE IN T HE FINANCIAL YEAR DIFFERENT FROM THE FINANCIAL YEAR UNDER APPEAL, BUT FAILED TO FILE ANY CORROBORATIVE EVIDENCE, THEREFORE TH LEARNED COMMIS SIONER (APPEALS) RIGHTLY REJECTED THE CLAIM OF THE ASSESSEE AND HIS ORDER SHOULD BE UPHELD. 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS MADE CASH PAYMENT IN EXCESS OF ` 20,000 IN CONTRAVENTION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THE ASSESSEE CLAIMED THA T ITS CASE COMES WITHIN THE PURVIEW OF PROVISO TO SECTION 40A(3) OF THE ACT, WHERE IT WAS CLARIFIED THAT NO DIFFERENCE SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFIT AND GAIN OF BUSINESS OR PRO FESSION UNDER SUB SECTION (3) WHERE A PAYMENT MADE TO A PERSON IN A D AY OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES A S MAY PRESCRIBED, HAVING REGARD TO THE NATURE OF BANKING FACILITIES A VAILABLE, CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELE VANT FACTORS. THE 9 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. ASSESSEE CLAIMED THAT IT HAS MADE CASH PAYMENTS, AS THE BUYER ARE DEALING WITH US FOR THE FIRST TIME AND ARE INSISTIN G FOR CASH PAYMENT. THEREFORE, THERE IS A BUSINESS EXPEDIENCY AND ACCOR DINGLY CASH PAYMENT OUTSIDE THE PURVIEW OF PROVISIONS OF SECTIO N 40A(3) OF THE ACT. 9. HAVING HEARD BOTH SIDES, WE FIND THAT ALTHOUGH THE ASSESSEE CLAIMS TO HAVE MADE THE PAYMENT ON THE INSISTENCE O F THE BUYER FAILED TO FILE ANY CORROBORATIVE EVIDENCES TO JUSTIFY ITS STAND, THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE FAILED TO MAKE OUT A CASE OF BUSINESS EXPEDIENCY. INSOFAR AS THE PAYMENT MADE ON SUNDAY IS CONCERNED, ALTHOUGH THE ASSESSEE CLAIMS THAT THE PA YMENTS ARE MADE ON SUNDAY, FAILED TO FILE ANY EVIDENCES, THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE FAILED TO MAKE OU T EVEN A CASE OF NONAVAILABILITY OF BANKING FACILITY AT THE PLACE O F PAYMENT AND ON THE DATE OF PAYMENT. HENCE, WE ARE OF THE CONSIDERED VI EW THAT THE ASSESSING OFFICER WAS RIGHT IN MAKING ADDITIONS TOW ARDS CASH PAYMENT UNDER SECTION 40A(3) OF THE ACT. COMING BACK TO THE SECOND ARGUMENT OF THE ASSESSEE, THE LEARNED AUTHORISED REPRESENTAT IVE FOR THE ASSESSEE HAS TAKEN AN ARGUMENT FOR THE FIRST TIME B EFORE THE LEARNED COMMISSIONER (APPEALS) THAT THE IMPUGNED PAYMENTS A RE MADE IN FINANCIAL YEAR DIFFERENT FROM FINANCIAL YEAR UNDER CONSIDERATION, THEREFORE, NO ADDITIONS CAN BE MADE UNDER SECTION 4 0A(3) OF THE ACT, 10 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. IN RESPECT OF PAYMENTS MADE IN A YEAR DIFFERENT FRO M THE ASSESSMENT YEAR UNDER CONSIDERATION, IN THIS REGARD, HE FILED NECESSARY DETAILS INCLUDING COPY OF SALE DEEDS. 10. HAVING CONSIDERED BOTH THE PARTIES, WE FIND THAT AS PER THE PROVISIONS OF SECTION 40A(3) OF THE ACT, WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH A PAYMENT MADE TO A PERSON IN A DAY OTHERWISE THAN BY WAY OF ACCOUNT PAYEE CHEQUE / DEM AND DRAFT IN EXCESS OF ` 20,000, NO DEDUCTION SHALL BE ALLOWED IN RESPECT O F SUCH EXPENSES. IN THIS CASE, THE ASSESSEE CLAIMS THAT IT HAS MADE PAYMENT IN PREVIOUS FINANCIAL YEAR DIFFERENT FROM THE YEAR UNDER CONSIDERATION, THEREFORE, IF AT ALL ANY ADDITION IS REQUIRED IT CA N BE MADE IN A YEAR IN WHICH THE PAYMENTS ARE MADE. WE DO NOT FIND ANY MER IT IN THE ARGUMENTS ADVANCED BY THE ASSESSEE FOR THE REASON T HAT THE YEAR OF PAYMENT IS IRRELEVANT FOR THE PURPOSE OF DISALLOWAN CE OF SECTION 40A(3) OF THE ACT AND WHAT IS REQUIRED IS THE YEAR OF CLAI M OF EXPENDITURE IN THE BOOKS OF ACCOUNT. IN THIS CASE, THE ASSESSING O FFICER HAS BROUGHT OUT CLEARLY THE FACTS TO THE EFFECT THAT THE ASSESS EE HAS DEBITED EXPENDITURE TOWARDS PURCHASE OF LAND IN THE YEAR UN DER CONSIDERATION AND, HENCE, ANY PAYMENT MADE IN CASH INCLUDING PAYM ENT MADE IN PREVIOUS FINANCIAL YEAR ARE COMING WITHIN THE AMBIT OF SECTION 40A(3) OF THE ACT, WHEN SUCH PAYMENT HAS BEEN TREATED AS E XPENDITURE IN PROFIT & LOSS ACCOUNT. THEREFORE, WE ARE OF THE CON SIDERED VIEW THAT 11 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. THE ASSESSING OFFICER WAS RIGHT IN MAKING ADDITION TOWARDS CASH PAYMENT UNDER SECTION 40A(3) OF THE ACT . THE LEARN ED COMMISSIONER (APPEALS) AFTER CONSIDERING THE RELEVANT SUBMISSION S HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. CONSEQUENTLY, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LEARNE D COMMISSIONER (APPEALS) AND, THEREFORE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) AND DISMISSED THE GR OUNDS RAISED BY THE ASSESSEE. 11. IN THE RESULT, ASSESSEES APPEAL STANDS DISMISSED. ITA NO.343/NAG./2015 ASSESSEES APPEAL A.Y. 201112 12. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATION FROM GROUND NO.1 IS DISALLOWANCE OF CASH PAYMENT OF ` 53,50,000 UNDER SECTION 40A(3) OF THE ACT. 13. WE HAVE CONSIDERED SIMILAR ISSUE IN ITA NO.291/NAG. /2015, IN PRECEDING PARAGRAPH. THE FACTS INVOLVED IN THIS APP EAL ARE IDENTICAL TO THE FACTS WHICH WE HAVE ALREADY CONSIDERED IN APPEA L BEING ITA NO.291/NAG./2015. THE REASONS GIVEN BY US IN PRECED ING PARAGRAPH SHALL MUTATIS MUTANDIS APPLY TO THIS APPEAL ALSO AN D, THEREFORE, FOR SIMILAR REASONS, WE UPHOLD THE FINDING OF THE LEARN ED COMMISSIONER (APPEALS) IN CONFIRMING THE DISALLOWANCE OF CASH PA YMENT UNDER 12 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. SECTION 40A(3) OF THE ACT AND DISMISS THE GROUND OF APPEAL BY THE ASSESSEE. 14. THE SECOND GROUND THAT CAME UP FOR OUR CONSIDERATIO N IS DISALLOWANCE OF BAD DEBT WRITTENOFF OF ` 10.50 LAKH. 15. THE ASSESSING OFFICER HAS DISALLOWED BAD DEBT WRITT ENOFF ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FILE NECESSA RY EVIDENCES TO PROVE THAT THE INCOME PERTAINING TO BAD DEBT WRITTE NOFF IN THE YEAR UNDER CONSIDERATION HAS BEEN CONSIDERED IN THE PREV IOUS FINANCIAL YEAR. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HA S NOT FULFILLED THE CONDITIONS PRESCRIBED UNDER SECTION 36(2) OF THE AC T, THEREFORE, DISALLOWED BAD DEBT CLAIM OF ` 10.50 LAKH. IT IS THE CONTENTION OF THE ASSESSEE THAT ONCE BAD DEBT IS WRITTENOFF IN THE B OOKS OF ACCOUNT, IT IS NOT NECESSARY TO PROVE THAT THE DEBT HAS REALLY BEC OME BAD AND WHAT IS REQUIRED IS THE DEBT MUST BE WRITTENOFF IN ITS BOOKS OF ACCOUNT AND THE INCOME HAS BEEN OFFERED IN PREVIOUS FINANCIAL Y EAR. THE ASSESSEE FURTHER CONTENDED THAT EVEN OTHERWISE ALSO, IT IS A BUSINESS LOSS INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION OF TH E BUSINESS WHICH NEEDS TO BE ALLOWED UNDER SECTION 37 OF THE ACT, ON CE THE ASSESSEE PROVED THAT THESE ARE NORMAL BUSINESS ADVANCES GIVE N IN THE COURSE OF BUSINESS. 13 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. 16. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH REGAR D TO THE FACT THAT THE ASSESSEE HAS CLAIMED BAD DEBT WRITTENOFF IN BOOKS OF ACCOUNT BY PASSING NECESSARY JOURNAL ENTRIES BY WRITINGOFF DE BTS IN THE BOOKS OF ACCOUNT. ONCE THE DEBTS ARE WRITTENOFF IN THE BOOK S OF ACCOUNT, IT IS SUFFICIENT COMPLIANCE OF PROVISIONS OF SECTION 36(1 )(VIIA) OF THE ACT AND THE ASSESSEE IS NOT REQUIRED TO PROVE THAT THE DEBT BECOME REAL BAD DURING THE YEAR UNDER CONSIDERATION. THIS LEGAL POS ITION HAS BEEN REITERATED BY THE HONBLE SUPREME COURT IN TRF LTD. V/S CIT, 190 TAXMAN 391 (SC), WHEREIN THE HONBLE SUPREME COURT HELD THAT AFTER 1 ST APRIL 1989, IT IS NOT NECESSARY FOR THE ASSESSEE T O ESTABLISH THAT THE DEBT HAS BECOME IRRECOVERABLE AND IT IS ONLY IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSE E. IN THIS CASE, THERE IS NO DOUBT WITH REGARD TO THE FACT THAT THE ASSESS EE HAS WRITTENOFF THE DEBT IN THE BOOKS OF ACCOUNT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER WAS ERRED IN DISALL OWING BAD DEBT UNDER SECTION 36(1)(VIIA) OF THE ACT. THE LEARNED C OMMISSIONER (APPEALS) WITHOUT APPRECIATING THE FACTS SIMPLY CON FIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. THEREFORE, WE REVERS E THE FINDING OF THE LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE AN D DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE ON AC COUNT OF BAD AND DOUBTFUL DEBT. 14 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. 17. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATION I S DISALLOWANCE OF BROKERAGE AND COMMISSION EXPENSES OF ` 7,25,390. 18. THE ASSESSING OFFICER DISALLOWED BROKERAGE EXPENSES OF ` 7,25,390 ON THE GROUND THAT THE BROKERAGE AND COMMI SSION EXPENSES CLAIMED BY THE ASSESSEE IS EXCESS AND UNREASONABLE WHEN COMPARED TO THE GROSS RECEIPT FROM THE BUSINESS. THE ASSESSI NG OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAS CLAIMED BROKERAGE AN D COMMISSION EXPENSES OF ` 76,47,410, WHICH IS 7.9% OF GROSS RECEIPTS. ACCORD INGLY, HE HAS ALLOWED BROKERAGE AND COMMISSION TO THE EXTE NT OF 5% OF GROSS RECEIPTS AND BALANCE AMOUNT HAS BEEN DISALLOW ED. IT IS THE CONTENTION OF THE ASSESSEE THAT BROKERAGE AND COMMI SSION EXPENSES IS SUPPORTED BY VALID EVIDENCES AND ALSO NECESSARY TDS HAS BEEN DEDUCTED, THEREFORE, THERE IS NO REASON FOR THE ASS ESSING OFFICER TO DISALLOW PART OF THE BROKERAGE EXPENSES ON THE GROU ND THAT IT IS EXCESSIVE AND UNREASONABLE WITHOUT BRINGING ON RECO RD ANY COMPARABLE CASES WHERE THE BROKERAGE EXPENSES IS LE SS THAN OR EQUAL TO 5%. THE ASSESSEE FURTHER CONTENDED THAT IN THE A BSENCE OF ANY INCORRECTNESS IN BILLS AND VOUCHERS IN RESPECT OF A PARTICULAR EXPENDITURE, THE BOOKS OF ACCOUNT CANNOT BE REJECTE D ONLY FOR ESTIMATING A SINGLE EXPENDITURE. 15 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. 19. HAVING HEARD BOTH THE PARTIES AND CONSIDERING THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSING OFFICER DISALLOW ED BROKERAGE AND COMMISSION EXPENSES BY ALLOWING ADHOC 5% ON GROSS RECEIPTS WITHOUT BRINGING ON RECORD ANY CONTRARY FINDING IN RESPECT OF BOOKS OF ACCOUNT AND BILLS AND VOUCHERS MAINTAINED FOR SUCH EXPENSES. ON THE OTHER HAND, THE ASSESSEE HAS FILED NECESSARY EVIDEN CES TO PROVE THAT THE BROKERAGE HAS BEEN PAID BY CHEQUE AND NECESSARY TDS HAS BEEN DEDUCTED ON SUCH BROKERAGE PAYMENTS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER WAS ERRE D IN MAKING ADHOC DISALLOWANCE WITHOUT BRINGING ON RECORD ANY CONTRAR Y FINDING IN RESPECT OF BOOKS OF ACCOUNT AND BILLS AND VOUCHERS. THE LEA RNED COMMISSIONER (APPEALS) HAS ACCEPTED THE FACT THAT BROKERAGE EXPE NSES IS SUPPORTED BY VALID EVIDENCE, YET CONFIRMED PARTIAL AMOUNT OF ` 7,25,390 ON THE GROUND THAT ` 7,25,290, PERTAINS TO ADVANCES REFLECTED IN THE BAL ANCE SHEET AS LIABILITY WHICH IS PERTAINING TO OTHER FIN ANCIAL YEARS OTHER THAN THE YEAR UNDER APPEAL WHICH CANNOT BE ALLOWED AS DE DUCTION FOR THE YEAR UNDER CONSIDERATION. WE ALSO FIND THAT THE FIN DING OF THE FACT RECORDED HAS NOT BEEN CONTROVERTED BY THE ASSESSEE BY FILING ANY EVIDENCE TO PROVE THAT THE SAID AMOUNT PERTAINS TO THE ASSESSMENT YEAR IN QUESTION. THEREFORE, WE ARE OF THE CONSIDER ED VIEW THAT THERE IS NO ERROR IN THE FINDING OF THE LEARNED COMMISSIONER (APPEALS), HENCE, 16 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LEARN ED COMMISSIONER (APPEALS) AND REJECT THE GROUND TAKEN BY THE ASSESS EE. 20. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATION I S DISALLOWANCE OF MURUM EXPENSES, POAL EXPENSES, SAND AND BOULDER EXPENSES OF ` 38,07,335. 21. THE ASSESSING OFFICER MADE ADDITION TOWARDS EXPENDI TURE INCURRED BY REJECTING THE BOOKS OF ACCOUNT ON THE G ROUND THAT THE ASSESSEE HAS FAILED TO FILE ANY DOCUMENTARY EVIDENC E IN SUPPORT OF SUCH EXPENSES AND ALSO A SINGLE ENTRY HAS BEEN PASS ED ON 31 ST MARCH 2011, WITHOUT ANY DESCRIPTION. THE ASSESSING OFFICE R FURTHER OBSERVED THAT THE SAID EXPENDITURE WAS CLAIMED TO HAVE BEEN INCURRED IN CASH. THE ASSESSING OFFICER FURTHER STATED THAT THE ASSES SEE COULD NOT PRODUCE ANY BILLS AND VOUCHERS IN SUPPORT OF EXPEND ITURE. IT IS THE CONTENTION OF THE ASSESSEE THAT IT HAS FURNISHED NE CESSARY EVIDENCE IN SUPPORT OF MURUM EXPENSES, POAL EXPENSES, SAND AND BOULDER EXPENSES, BUT THE ASSESSING OFFICER IGNORED ALL THE EVIDENCES FILED MERELY FOR THE REASON THAT THE SAID EVIDENCES ARE X EROX COPIES OF BILLS AND VOUCHERS. THE ASSESSEE FURTHER CONTENDED THAT I T HAS FILED COMPLETE DETAILS OF LEDGER ACCOUNT ALONG WITH BILLS AND VOUCHERS IN SUPPORT OF EXPENSES, THEREFORE, THERE IS NO REASON FOR THE ASSESSING 17 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. OFFICER TO MAKE DISALLOWANCE OF EXPENDITURE MERELY FOR THE REASON THAT ONE SINGLE ENTRY HAS BEEN PASSED IN THE BOOKS OF AC COUNT. 22. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS FILED A PAPER BOOK CONTAINING LEDGER ACCOUNT OF EXPENDITURE ALONG WITH BILLS AND VOUCHERS IN SUPPORT OF MURUM EXPENSES, POAL EXPENSES, SAND AND BOULDER EXPENSES. THE ASSESSEE CLAIMED THAT THOUGH A SINGLE ENTRY HAS BEE N PASSED IN THE BOOKS OF ACCOUNT AS ON 31 ST MARCH 2011, THE SAID EXPENDITURE IS SUPPORTED BY PROPER BILLS AND VOUCHERS, BUT THE AUT HORITIES BELOW IGNORED ALL EVIDENCES ONLY ON THE REASON THAT A SIN GLE ENTRY HAS BEEN PASSED AT THE END OF THE YEAR. THERE IS A DIVERGENT FACTS EMERGED FROM THE ORDERS OF THE LOWER AUTHORITIES AND THE ARGUMEN TS OF THE ASSESSEE. THE ASSESSING OFFICER CLAIMED THAT THE ASSESSEE HAS NOT FILED ANY EVIDENCE IN SUPPORT OF EXPENDITURE. THOUGH, THE LEA RNED COMMISSIONER (APPEALS) ACCEPTED THE FACT THAT THE ASSESSEE HAS F ILED XEROX COPY OF VOUCHERS, BUT WENT ON TO CONFIRM THE ADDITIONS ON T HE GROUND THAT THOSE VOUCHERS WERE NOT FURNISHED BEFORE THE ASSESS ING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE MIGHT NOT HAVE FURNISHED EVIDENCES BEFORE THE ASSESSING OFFICER, BUT WHEN SA ID EVIDENCES WERE PRODUCED BEFORE THE LEARNED COMMISSIONER (APPEALS), THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAVE COMMENTED ON T HE EVIDENCES FILED BY THE ASSESSEE HIMSELF OR GET THEM VERIFIED FROM THE ASSESSING 18 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. OFFICER BY CALLING FOR REMAND REPORT BEFORE ARRIVIN G AT A CONCLUSION THAT THE ASSESSEE HAS FAILED TO GIVE ANY JUSTIFICATION F OR SUCH EXPENDITURE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE I SSUE NEEDS TO BE REEXAMINED BY THE ASSESSING OFFICER IN THE LIGHT O F THE EVIDENCES BY THE ASSESSEE, HENCE, WE RESTORE THE ISSUE TO FILE O F THE ASSESSING OFFICER AND DIRECT HIM TO CAUSE NECESSARY VERIFICAT ION OF BILLS AND VOUCHERS FILED BY THE ASSESSEE AFRESH AFTER GIVING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ACCORDINGLY , THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 23. IN THE RESULT, APPEAL BY THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. 24. TO SUM UP, APPEAL IN ITA NO.291/NAG./2015 IS DISMIS SED AND APPEAL IN ITA NO.343/NAG./2015, IS PARTLY ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26.10.2018 SD/- SANDEEP GOSAIN JUDICIAL MEMBER SD/- G. MANJUNATHA ACCOUNTANT MEMBER NAGPUR, DATED: 26.10.2018 19 M/S. PYRAMID DEVELOPERS M/S. PYRAMID ARCADE PVT. LTD. COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (A.R./SR. P.S./P.S.) ITAT, NAGPUR